Feds backtrack on funding cuts to Nunavut, other territories

Nunavut Finance Minister Keith Peterson and his staff are quickly revising their upcoming budget, set to be delivered Feb. 25, in light of recent funding changes announced in Ottawa. Feb. 16. (FILE PHOTO)

Nunavut Finance Minister Keith Peterson said he is relieved that his federal counterpart is putting money back into Nunavut’s budget, cut last December in a territorial formula financing accounting glitch.

The extra money Nunavut will now receive is still about $8 million less than what Nunavut was hoping for, but Peterson said that overall he’s pleased at how swiftly federal Finance Minister Bill Morneau acted.

“I was quite relieved yesterday when we got word that they found an immediate solution. Longer term solutions will require legislative changes, but yes, it was quite a relief,” Peterson told Nunatsiaq News Feb. 17.

Peterson and his territorial counterparts learned of the funding shortfalls during a finance ministers meeting in Ottawa last December.

Due to a change in how Statistics Canada works with provincial and municipal spending data, federal staff re-calculated how much money they give to the territories under their territorial funding formulas.

But Morneau announced that he would be backtracking on those cuts during Question Period in the House of Commons Feb. 16, in response to a question from Northwest Territories MP Michael McLeod.

“The Minister of Finance pledged to identify options for addressing the impact of recent data revisions on territorial financial planning. Would the minister please update the House on what progress has been made on this file?” McLeod asked.

“Canadians expect their governments to work together,” Morneau responded, according to Hansard, which records House of Commons proceedings. “We have collaborated with the three territories to make the territorial funding formula more stable and predictable over time.”

Morneau said he would put $67 million back into funding for the three territories and that he will soon introduce an amendment to the territorial formula financing agreement or TFF to avoid problems in the future.

Timing was a real concern; Peterson is scheduled to deliver Nunavut’s 2016-17 budget address at the Nunavut legislature on Feb. 25 and he informed Morneau about this back in December, during those meetings in Ottawa.

“I stressed quite strongly that our winter sitting comes up in February and that we’d been working on our budget for quite a long time, at that point almost six months,” said Peterson, describing his conversation with Morneau.

“I told him I needed some kind of certainty, or an indication one way or another, going into making my budget address.”

As a result of that re-calculation of the TFF in December, the Government of Nunavut was slated to receive $11.2 million more from Ottawa in 2016-17 than it received in the previous year.

But that was $34 million less than what the GN was banking on for this upcoming fiscal year.

Understandably, the cuts garnered full and immediate condemnation from Canada’s three territories and a flurry of lobbying began between territorial premiers and their federal MPs, all of whom are Liberal.

The pressure paid off.

Peterson said he was told Feb. 16 that Nunavut would get $26.1 million more than what was announced in December.

While that’s short of what they hoped for, it’s still a positive sign that Ottawa takes Nunavut’s needs seriously, the finance minister said.

“At the time, [Morneau] told us it was all unintended and unfortunate,” Peterson said.

“But we stressed to him strongly that we need this funding, because the territories require stable and predictable funding. We have a lot of needs in Nunavut, in terms of housing, health and education.”

Peterson’s staff are now working to finalize Nunavut’s upcoming budget in light of yesterday’s funding announcement, the minister said.

“We’re still evaluating. We only got the information yesterday afternoon, so our guys are busy crunching numbers right now.”

It’s too early to tell what areas will suffer as a result of the small shortfall but Peterson was reluctant to criticize Ottawa for that.

“It was quite a positive working relationship with the government of Canada and with Minister Morneau,” Peterson said. “The level of collaboration and cooperation in the discussions was very encouraging.”

Peterson said he has reason to hope that cooperation continues.

He’s also asking the federal government to include some goodies for Nunavut when Morneau delivers his national budget this spring.

Peterson said he mad two other requests to Morneau in December, for:

• $525 million over five years for housing in Nunavut; and,

• $250 million to help Nunavut replace it’s aging fleet of power plants.

Morneau is still in pre-budget consultations but Prime Minister Justin Trudeau told reporters recently that it will be difficult to stick to his election promise of keeping this year’s deficit under $10 billion.

Morneau is expected to deliver his budget in late March.